Jane Orient provides wisdom

I have always been impressed with the essays of Jane Orient at the newsletter of the American Association of Physicians and Surgeons.

Sometimes she just knocks me out with her scholarship and thoughtfulness.

Here is her latest and I would say–it is typical of her erudition, but it rang a bell in my head and reminded me of why I worry that we are seeing the culmination of 1984 in the adminstration of this barbarian from Chicago.

Here’s Jane, Internal Medicine specialist, but more than that, from Arizona:

“Do you remember,” [O’Brien] went on, “writing in your diary,
‘Freedom is the freedom to say that two plus two make four’?”

“Yes,” said Winston.

O’Brien held up his left hand, its back toward Winston, with the thumb
hidden and the four fingers extended.

“How many fingers am I holding up, Winston?”

“Four.”

“And if the Party says that it is not four but five — then how many?”

George Orwell, 1984

The torturer’s goal was not simply to force Winston to say
“five,” but to get him actually to believe it—and to change his
belief to “three” if the Party so required.

The objective truth is that two and two always make exactly
four, and for every such equality, there is an infinity of inequali-
ties. If [some] inequalities are defined as “disparities,” which are
“unfair” (see AAPS News, February 2014 and March 2010), re-
formers have an unending task to “right” them.

Human beings are often discontented with the natural order
and may go to extreme measures to alter it. In the topsy-turvy
world of Gilbert and Sullivan, Princess Ida wants to overturn the
old order in her all-female academy, but does see where it leads:

The narrow-minded pedant still believes

That two and two make four! Why we can prove, …

That two and two make five or three or seven;

Or five and twenty, if the case demands!

Let all your things misfit, and you yourselves

At inconvenient moments come undone!…

[Let] the bashful button modestly evade

The soft embraces of the button-hole! …

Let old associations all dissolve, …

In other words let Chaos come again!

The Source of Inequality

The obviously unequal distribution of beauty, talent, strength,
happiness, health, and wealth was previously accepted as the de-
cree of Fate, Nature, Providence, or Karma. In a special section
on “the science of inequality” in the May 23 issue of Science,
Adrian Cho explains the most probable distribution of energy in
the molecules of a gas: exponential, with many molecules of low
energy and a few of high energy. That is the natural inequality
arising from entropy. A similar distribution, with some caveats,
arguably applies to income and wealth.

But is it fair? While humans, like animals, are born unequal,
our ancestors in “our egalitarian Eden,” writes Elizabeth Pennisi,
adopted an egalitarian way of life that lasted up until 10,000 years
ago. The appearance of storable surpluses was one of the “ancient
roots of the 1%,” explains Heather Pringle. This inequality
“plagues” economies, writes Cho, and disparities can be deadly,
writes Emily Underwood. Leveling income inequality might, some
suggest, avert up to 1.5 million deaths annually, worldwide.

Science editors applaud Big Data, with benefits potentially as
great as the Human Genome Project. A century of income data
and two centuries of wealth data have been compiled, and the
Gini inequality coefficient calculated for 117 nations.

French economics superstar Thomas Piketty, author of ama-
zon number-one best-seller Capital in the Twenty-First Century, has
crunched the numbers and revealed that the rate of return on
capital (r) is greater than the rate of economic growth (g). “This
simple formula (r > g) means that families who own capital tend
to acquire more and more wealth,” writes Eliot Marshall.

Piketty concedes that the pattern broke down in the mid-20th
century. Thanks to the Great Depression and the destruction
wrought by two world wars, we had a “golden era” between 1950
and 1980, “triggering a pause in the concentration of wealth.” But
now we have reached an “extreme point” that could lead to
“terrifying” disparities that threaten democracy.

Fictional accounts of efforts to level disparities have been
terrifying dystopias: for example, Kurt Vonnegut’s “Harrison
Bergeron,” in which the hero must carry 300 pounds to compen-
sate for his natural advantages; Facial Justice by L.P. Hartley; and
We by Yevgeny Zamyatin, which probably inspired George Or-
well and Ayn Rand. In the real world, we have experiments like
Cuba and Mao’s China (see p 2).

Piketty’s proposal, greeted by Paul Krugman and other
Keynesians with ecstatic applause, calls for punitive taxes on
wealth (see John Goodman’s analysis at http://tinyurl.com/
mjwjyg5). The tax would have to be global and involve an inter-
national banking regime to prevent capital flight (http://
tinyurl.com/ml2qtgu).

A utopian state of income and wealth “equality” cannot oc-
cur without changing human nature, attempting to wipe out natu-
ral differences—and existing institutions that oppose the totalitar-
ian agenda. This includes religion, the family, and what George
Bernard Shaw called “middle class morality” (see p 2).

If she carried out her glorious scheme to get all the maidens
to abjure tyrannic Man, Ida thought all Posterity would exalt
her—save for the question, “How is Posterity to be provided?”

Casualties of the War on Inequality

Starting in 1949, “Mao Zedong waged war on inequality of all
kinds. The administration seized property from privileged classes,
imprisoned intellectuals, and appointed teams of workers to run
universities. The revolution upended the class structure, and the
party campaigned against inherited wealth and gender discrimina-
tion” (Hvistendahl, op. cit.). The Science article does not mention
the tens of millions of casualties, though it does concede that the
“leveling” of society concentrated wealth in the hands of the party
cadre. Since China’s about-face in the 1980s, the Gini coefficient
has leaped from 0.28 to around 0.55, cf. 0.4 for the U.S., where 0
represents perfect equality of incomes, and 1 means a single per-
son holds all the wealth. The government fears a backlash, but
“many Chinese view inequality as the price of economic growth
and accept it as a ‘fact of life.’”

Another model for total equality is Cuba, which had a higher
per-capita income than most of Europe in 1958. Now people eke
out life in the ruins, with a maximum wage of $20/month for
most jobs (City J, spring 2014, http://tinyurl.com/l82ajgm).

Piketty’s 700-p tome has no index entry for Cuba or Mao.

Inequalities Absent from Piketty’s Formula

. Noneconomists know inequality of outcome by another term:
life (Transom 4/23/14, http://tinyurl.com/p5s7593).
. Inflation benefits owners of assets like art, while struggling
families fall farther and farther behind (James Cook).
. The strongest statistical correlate for inequality in the U.S. is
single-parent families. More than 20% of children raised in
single-parent families live in poverty long-term compared
with 2% of those raised in two-parent homes (WSJ 4/21/14).
. In many nations, massive fortunes accumulate more as a re-
sult of thievery and corruption than as a consequence of capi-
tal investment (Atlantic 5/27/14, http://tinyurl.com/p9z9b28).
. In the U.S., states with the most redistributionist policies
have the greatest inequality (Moore, Vedder, WSJ 6/5/14).
. Great fortunes come from extraordinary technological inno-
vation, such as the microprocessor (Gordon, WSJ 6/5/14).

Cultural Revolution First

The working class failed to rise up and overthrow capitalism.
The explanation, according to two of Marx’s disciples, was the
immune system—Christianity and Western culture. Georg Lukacs
instituted a radical sex education program in Hungarian schools,
to promote licentiousness as a way to destroy the family and anni-
hilate the old values. Antonio Gramsci promoted the “long march
through the institutions”—arts, schools, media—to subvert tradi-
tional values (MIA, March 2014, excerpting Pat Buchanan).

The centerpiece of Kristallnacht in 1938 was the desecration
and burning of the Torah all over Germany—part of the Nazi
effort to create a new German identity (Commentary, June 2014).

…..

“As Marxist despots from Cuba to Greece have discovered to their huge
disappointment, governments can neither create wealth nor effectively redistrib-
ute it; they can only expropriate it and watch it dissipate.”

George Gilder

Resolutions, Nominations

“Gender equity” or “addressing gender disparity” is a prime
objective of ObamaCare. The contraception/abortion mandate,
states the National Center for Public Policy Research, is “about
promoting the economic and social power of women relative to
that of men” (http://tinyurl.com/pll68hg). It enables women,
like men, to have sex without having a baby.

Though one may question the assertion that same-sex attrac-
tions are genetic and hence unalterable, sex is indisputably genetic.
Differences between men and women are profound—though
researchers have been warned not to study them, lest they “kill
their career.” Male and female brains are organized differently,
and there are large differences in behavior with only 10% overlap
in the distributions. There are even sex-specific patterns in the
expression of immune-system-related genes (Larry Cahill, Dana
Foundation 4/1/14, http://tinyurl.com/pvupyfj).

The Y chromosome is not just a male-determining switch: “It
has an impact on gene regulation across the genome in males,
potentially influencing biological functions throughout life and in
every tissue” (Clark AG, Nature 2014;508:463-465).

Yet “sex change” (or “gender reassignment”) surgery is
claimed by some as a right (see p 3). Facebook introduced a drop-
down menu with 56 gender-identity choices (Townhall.com 3/4/14,http://tinyurl.com/njc4e64). In other words, Chaos.

“The deconstruction of gender implies nothing less than the
splitting of the personal atom: social nuclear fission.”

An article on “Same-Sex Marriage—a Prescription for Better
Health” now comes from the University if Minnesota (NEJM
4/10/14). Chicago public school kindergarten teachers are re-
quired to devote 30 minutes/month to sex education. About one-third of the U.S. population, and one-fourth of teenage girls, has
at least one sexually transmitted disease. The marriage rate
(6.8/1,000/y) is at an all-time low (MIA, June 2014).

“We have now sunk to a depth at which the restatement of the
obvious is the first duty of intelligent men. It is not merely that at
present the rule of naked force obtains almost everywhere. Probably that has
always been the case. Where this age differs from those immediately preceding
it is that a liberal intelligentsia is lacking. Bully-worship, under various dis-
guises, has become a universal religion, and such truisms as that a machine-
gun is still a machine-gun even when a ‘good’ man is squeezing the trigger…
have turned into heresies which it is actually becoming dangerous to utter.”

The Keynesians who argue that a tax on wealth would save lives, are not stupid. They are either insane, or intentional liars. This follows, at its most fundamental logical root, from the fact that wealth is created. Don’t get embroiled in these dummies’ spinning, equivocating, and out of context fussing with all the surface stats from which it’s so easy to rationalize false inferences. Yes, facts are the ultimate arbiter of truth. But to limit an argument to the facts when your opponent is devious, dishonest, and deceitful, is to make the job of PROVING your point to the “casual observer” or layman, next to impossible. At best it will remain an “unresolved matter of opinion” in the minds of most.

The Industrial Revolution led to wealth creation on a scale FAR beyond anything previous in all human history; it liberated the “common man;” it freed women from dependence on men for their survival; it reduced child mortality and exended lifespans which led to a population explosion in the human race which is still ongoing. What sparked this previously inconceivable event, and gave it the ooomph that made it into an INDUSTRIAL revolution with the power to achieve the above consequences (and more)? Answer: the repeal of the corn laws in England, and similar usury laws in other nations. Those slower to repeal such laws, lagged in their participation in the health, wealth, and general well-being of nations which were quicker to do so. Laws against, or severely limiting, the charging of interest for loans of capital had been almost universal in western civilization preceding the Industrial Revolution.

That’s why it was so hard to accumulate capital. Most of us who live in the modern world (except many Keynesians and people of sub-normal intelligence) have come to understand by now why virtually any good is more valuable as an actual possession today than as a potential possession in the future. Therefore, why save? Spending gets you a real apple today, while saving may get you an uncertain apple tomorrow– the SAME apple, with less certainty. You have nothng to gain and something to lose by saving. Interest provides an incentive even to the poor to attempt some saving. The repeal of the laws which had prohibitied interest are what enabled the accumulation of capital, real physical capital, purchases with savings — ie by means of curtailed consumption, in favor of expending time and labor into the creation of labor saving devices and processes and tools, rather than nearly 100% into consumption goods which left men in the same position today as they’d been in yesterday: vulnerable to any natural catastrophe and without the menas for creating material progress.

Interest on accumulated savings, or wealth, is THE PRECISE REVERSE of a tax on wealth. It is a reward or bonus for restricting your consumption in order to enable the creation of capital goods. Those who advocate a tax on wealth are advocating a REVERSE Industrial Revolution. They are regressive neanderthal minds which haven’t an inkling of the way the world works, or of the most basic fundamentals of their own (alleged) profession. It’s obvious to me that, for instance, Paul Krugman, is not merely wrong. He is stupider than stupid. He doesn’t has LESS than a newborn baby’s understanding of the nature of interest rates, of the source of wealth, of the fact that wealth is CREATED, not just something that sits there waiting to be distributed and consumed. ALL of man’s wealth MUST be CREATED by his own efforts. Even the apples on the trees require the (albeit small in many cases) effort of picking it off the tree and bringing to one’s mouth. An apple on the tree, as long as it remains on the tree, is of no use to anyone but certain worms. And Paul Krugman.

HOW is material wealth created? IE, WHAT is the process common to the creation of ALL material wealth: it’s simply RE-ARRANGING the raw matter of the world around us. Whether its the extraction of iron atoms from ore and re-arranging them to make a bridge, or the removal of fruit from trees, or harvesting of grain from the fields to the mills to the ovens to the bakery shelves, or the re-aranging of atoms in a molecule in order to make a cure for a disease.. ALL — ie EVERY SINGLE — instance of a material GOOD, an example of material wealth, has become WEALTH via the process of RE-ARRANGING matter into a form and location where IT THEN OFFERS A VALUE TO HUMAN BEINGS.

We need to consume every day in order to survive. Thus every day new efforts to re-arrange matter in a way that brings food within our grasp must be made. Wealth — goods which benefit and are of value to us — must be created anew every day, or every month or every year.

And if all we did was create and then consume wealth every day, we’d be like animals, living the same rote lives over and over in perpetuity. As mankind did do, for the most part, for millennia. Amazing machines were created — as toys for the wealthy who had achieved their wealth mostly by plunder and force, or by their ancestors’ engagement in these practices. There was little to no effort or even thought of making labor saving devices which could produce wealth on a massive scale.

One analogy and I’ll quit. A farmer harvests his crop. There’s the weatlh he’s created. If he consumes it all, he will starve next year because without seed corn he’ll have no new crop. If he tightens his belt so far as to save it all in the hopes of planting an enormous crop next year, he’ll starve now. He has to find a balance in allocating the wealth he’s created TODAY, into wealth he’ll consume, or wealth he’ll save, in order to enable his consumption tomorrow. He may save just enough corn to reproduce the same crop year after year and stagnate. Or he may opt for future progress — by tightening his belt a bit today, consuming less corn, and having more to plant next year. With that larger crop, he may THEN opt for the status quo — at a new, higher level of consumption. An incremental step of progress. Or, he may use his increased harvest to increase BOTH his consumption and his savings, adding part of the increased wealth he’s created for each purpose. And his crop will be still larger the following year.

Let Paul Krugman put a tax on his wealth — ie on his seed corn — and you are doing your bit to destroy human progress. Take some of his seed corn, send it off for consumption by, say, a political friend or a group of friends for their consumption, and the producer will have been handicapped in his ability to produce. The rate of progress will be slowed. Or REVERSED.

The lesson is that incentives to save and to continually accumulate wealth are ABSOLUTE NECESSITIES for economic progress. There are obvious natural incentives — as illustrated in the simple farmer’s case. Saving more now leads directly to the means for creating more wealth in the future.– if he’s at above subsistence level in his consumption and will not starve from a belt-tightening. But those who can, will save him, if they’re allowed to, by progressively increasing the total wealth creation forever. They will hire those who cna’t save, and eventually be forced to pay him far more than subsistence wages so he can become a saver too. IE, also a “capitalist.”

IN a money economy, the share of the increased “harvest” that comes from tightening one’s belt and saving your money, is the interest you’re paid, which lets you claim a share of the increased “harverst” of wealth creation your saving enabled, with thoss who physically performed the job of creating it getting a share too, called wages and profits.

Paul Krugman and his ilk can’t see through the money to the real world which gives it value via the creation of real wealth. Interest is the natural and necessary reward for saving, in a money economy, which is IDENTICAL to the reward the farmer gets by saving some of his harvest for planting next year. It is the very means by which economic progress is achieved. Krugman and his fellow inmates at the modern economics asylum think that punishing a man who has already voluntarily “punished” himself by restricting his own consumption in order to save and accumulate wealth which will be invested in capital goods to create more wealth in the future, SHOULD BE FURTHER PUNISHED BY TAKING PART OF THAT SAVINGS FROM HIM, THEREBY GIVING HIM AN INCENTIVE TO CONSUME RATHER THAN SAVE IT, and thereby creating a disincentive to perform the very act which is the fundamental prerequisite for economic progress.

In short, at any given moment there is a specific amount of wealth in the physical world. The most basic choices for its use, the first question regartding its “distribution,” are: consume it or save it? How much of it should be allocated to each of its two possible uses? The choice of answer to that question, determines the potential for economic progress and increased wealth production as time progresses. Paul Krugman wants to throw a monkey wrench into this choice by using the FORCE of law to discourage the accumulation of the SOLE AND MOST ESSENTIAL ECONOMIC MEANS FOR IMPROVING THE LIVES OF MANKIND. And he believes, or CLAIMS to believe, that this is a desirable policy, in contradiction to all logic, in contradiction to the fundamenatal nature of how our physical universe works,and in contradition to all empirical evidence, including evidence of the most blatantly obvious sort (eg, the above farmer, and the Industrial Revolution).

This is why it’s my opinion that Paul Krugman is the perfect candidate for Poster boy for all the keynesians and other modern economic theories which advocate a tax on wealth. This is why, in a somewhat abbreviated nutshell, it’s my opinion that he either suffers from a severe mental failing in his ability to think in certain areas, or else that he is a charlatan who intentionally lies about what he knows to be true for some ulterior motive. Let’s put it in black and white: If the above makes sense, then Paul Krugman and his “intelletual” coterie must all fall into one of two categories: Mentally deficient, or lying charlatans.

Very eloquent and in depth. I love it when people take apart the lefty socialist nonsense economic theories. It’s like a revisit of the most important economic studies I have done, von Mises, Hayek, Friedman, Skousen, Hazlitt, Sowell.

Sorry for tons of typos and other errors in my long post above — was exhausted and did no editing, but I guess it’s fairly clear. But I do want to clarify its 1st paragraph.

By definition, facts always rule in seeking the truth, but not necessarily in in the eyes or the minds of the audience at a debate. That was really the point of the 1st paragraph, which I’m not sure was clear. Some people don’t hold the truth as their 1st priority, and will cite falsehoods as facts, or cite facts out of context, etc. and a poor defense of the truth can be defeated in debate by a good defense of a falsehood. So . . .

. . . Even though you can demolish a point of view that involves a hypothesis by citing a single fact contradicting its logic, when faced with an unscrupulous opponent in a contest for the minds of those observing your debate, it is often a big help if you can show the logical derivation of your view, or of parts of it which your opponent opposes, via simple, logical and/or “common sense” reasoning from something which most listeners already accept as fact or obvious common sense, and already understand very well. Also, the use of good analogies using elements familiar to most people, will aid in their understanding and visualizing your viewpoint, and the more clearly they can see something which is in fact correct, the more invulnerable they will become to spurious arguments against it, even if they are unable to refute those spurious arguments with full rigor themselves.

The rest of my above comment was not so much intended to educate the kind of reader who tends to arrive at this site, as to provide him with a couple of arguments of this type, which may help swing those unfamiliar with economics to their side. Most people are unable to explain why water seeks its own level, but they know it does from experience and understand what that means. If you can show that your view follows directly from that familiar fact, it will help them to resist your opponent’s “spin,” equivocations, and other logic-twisting devices in the attempt to dissuade him from the point you’ve just demonstrated to the audience’s satisfaction. Many will not be able to explicitly refute his argument, but they will feel confident that there must be SOME flaw in it, if it contradicts YOUR view, and if you have shown your view to be the logical and/or “common sense” consequence of a fact they already know to be true.

In effect this does refute your opponent, but indirectly by contradiction, which is sometimes easier to demonstrate on topics whichare not familiar to your audience, than to go down the full “academic” logical train of a rigorous refutation which direct addresses the logical flaws in each part of a very devious opponent’s word-twisting, and which requires some “technical” knowledge of the subject from the audience .

What I’m saying is that sometimes it’s more productive to convince the audience of your view’s correctness in a simple way they can udnerstand (assuming they’re not experts on the topic themselves), than to try to refute your opponents every unscruplous device for proving his.

Once your audience is convinced that your argument follows inevitably from something they know to be true — even it you convince them by analogy rather than rigorous logic — but as long as you CONVINCE them of a point, then they will be listening to the remainder of the debate from a new perspective which is closer to yours. When your oppponent offers a counter-argument which SOUNDS kinda logical and presents the audience with what would have been an apparent paradox, or an inability to judge its correctness or falsehood with certainty, instead of “gosh, two opposing opinions. I wonder which is right. He’s got a point there which I have to admit I can’t refute,” the audience will be of a mind set that says “I can’t figure out at this point what’s wrong with that guy’s argument, but there has to be SOMETHING wrong, because I KNOW

COMPLETING THE JUST ABOVE WHICH I ACCIDENTALLY POSTED BY A SLIP OF THE FINGERTIP . . ..

. . . because I KNOW water seeks its own level (or “‘because I know a farmer can’t increase his crop without saving more corn for re-planting”).”

IE, he’s on your side or strongly in favor of it now, and upon hearing opposing arguments which disagree with it, instead of entertaining the possiblity that your arguments may not be as good as they seemed a moment before, the audience will be wondering what’s wrong with your OPPONENT’S argument, even if he can’t spot the exact error himself.